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Inova Chain Is Accused Of Gouging Uninsured

By Leef Smith

Washington Post Staff Writer
Friday, September 24, 2004; Page B06

Inova Health System, one of Virginia's largest nonprofit hospital chains, is being sued in federal court for allegedly overcharging uninsured patients and then using "aggressive and humiliating" techniques to collect.

The suit, filed last month in U.S. District Court in Alexandria, is one of more than 50 such claims filed this summer against nonprofit hospitals and systems across the nation. The suits, which lawyers hope to have certified as a class action, accuse the hospitals of abusing their tax-exempt status by charging uninsured patients significantly more than those who are insured while amassing vast sums of money.

Also named in more than 40 of the lawsuits is the American Hospital Association, the national trade association for the hospital industry. The Alexandria suit alleges that in providing guidance to Inova and other hospitals, the association has "conspired with and aided and abetted Inova with their billing and collection practices."

Inova has asked a judge to dismiss the suit. Today, attorneys for the hospital system will argue the motion in court, where the plaintiff will be represented by a team that includes Richard F. Scruggs, a Mississippi lawyer who is known for his successful legal battle with the tobacco industry and is now leading the fight against the hospitals.

Shannon Sinclair, Inova's general counsel, said yesterday that lawsuits are not the solution to the vexing issue of caring for the country's 45 million uninsured.

Inova officials said the health system incurred more than $100 million last year in unreimbursed costs for care provided to uninsured, underinsured and Medicaid patients. In January, Inova began providing a 35 percent discount to any uninsured patient.

Hospital officials said that they charge every patient the same initial price but that patients covered by private insurance receive negotiated discounts.

Doug Cropper, administrator of Inova Fairfax Hospital, said yesterday that hospitals are asked to pick up the slack for a problem that affects everyone. "A solution has to be a collaboration between hospitals and employers, individuals getting care and the government," Cropper said. "I feel for everyone who comes here with issues about how to cover the cost."

Inova is being sued by Paul Shipman, 43, of Herndon, who underwent a cardiac procedure at Inova Fairfax Hospital last year. Shipman, a furniture salesman, was uninsured at the time and was charged $29,492 for 21 hours of treatment. His attorneys claim that Medicare, which sets its own rates, would have paid about $15,000 for the same services.

"These are major differences," said Bryan Vroon, an attorney for Shipman, "and they have a real effect even on people who are not indigent."

Shipman and his wife, Alina, said they had more pressing bills and thought they could risk being uninsured while Alina finished work on her bachelor's degree.

The Shipmans said they became overwhelmed by medical bills. They said they were able to negotiate payment arrangements with the doctors and with the for-profit Reston Hospital Center, where Paul Shipman also was treated. But they said Inova was largely unsympathetic, offering a 15 percent discount, bringing the bill to $25,000, and then hiring a collection agency lawyer to phone them repeatedly.

"I told them: 'There's no way we can pay this much. Maybe we can make some arrangements,' " Alina Shipman recalled in an interview from her family's home in Romania. "He said, 'Okay, you'll pay $7,000 down and $1,000 a month.' I said, 'Inova will have to give us a room, and we'll put our mattress in it to live.' "

The suit alleges that Inova aggressively pursued uninsured debtors through abusive collection efforts, including lawsuits and liens, resulting in financial ruin for some.

"This is not a suit against a for-profit entity operating in a capitalist market," Vroon said. "This is a not-for-profit obligated to operate for charitable purposes."

Alina Shipman said she and her husband weren't looking for charity but for a discounted rate and a reasonable payment schedule.

"You save someone's life and then you threaten that person until they have another heart attack," Alina Shipman said.